- Financial reward
- Introduction
- In order for various organizations to meet their objectives, the top management must ensure that they develop an effective relationship between the organization and employees. The management of an organization can use the reward system in order to motivate their employee. Motivation plays an important role in acting as the driving force in the ensuring that the employee works in order to meet their target. Various studies have shown that motivation helps in promoting positive behavior among the employee in an organization. The management of an organization may use the rewards such gifts, incentives, promotion among others. However this essay mainly outlines the role of the financial rewards in enhancing the employee motivation. In relation to this the essay also outlines the possible benefit of using the financial reward in an organizational performance. In addition, this essay also presents some of the negative effects of using the financial rewards. However it is important to note that the essay present a strong argument in the support of the financial rewards
- Positive impacts of using the financial rewards
- The following are some of the positive impacts of using financial rewards.
- Motivation
- The financial rewards are mainly used by various organizations to motivate the employee. In relation to this, financial rewards help in ensuring productive use of the resources. This is because the utilization of the physical and the financial resources depends on the willingness of the people to work hence when the employee are motivated they will utilize the organizational resources. Financial incentives also help to ensure that there is increased efficiency and output in an organization since they facilitate the employee to work enthusiastically (Gilbert, & Walker 2001). Most importantly the use of the money to motivate the employee also helps in creating a goals directed behavior in an organization. In addition the use of the money to motivate the employee also helps to develop a friendly relationship among the workers in an organization. This is because motivation helps in bringing the employee closer to the organization since their needs are met (Holland, Pyman, Cooper & Teicher, 2011). Finally the use of the financial rewards helps in increasing the stability of the workforce. In relation to this good incentives helps to increase the loyalty of the customers and in turn helps to increase the enthusiasm among the employee to continue working for the organization. This can further help to increase the job satisfaction and hence help to issues reduce absenteeism among the employee in an organization.
- Promotes self-esteem among the employee
- Financial rewards also help to improve the self-esteem among the employee in the society. Through providing the financial rewards such the bonus the employee are motivated to work harder in the hopes that the organization will reward them. Improved self-esteem among the employee can help to ensure that the company maintains a good image. This in turn helps to ensure that the company is able to attract the highly qualified individuals who can allow the company achieves its growth strategies. Moreover, with employee-improved self-esteem, an organization can also be able to improve on its long-term association with their employee.
- Employee retention benefit
- Use of the financial reward also helps to play a critical role in ensuring that there is employee retention. This is because the workers who are given incentive are rarely can they start looking for employment in other organizations. This in turn helps in ensuring that an organization retains some of its best skilled employee. Employee retention also facilitates smooth production of goods and services in an organization. In relation to this companies such as the virgin Atlantic usually reward their skilled employee to ensure that they are able to retain such employee (Morden, 2007).
- Boosts productivity
- The urge of the employee to acquire the financial incentive in turn help to ensure that the employee put more effort in their work. Through such improved commitment and effort from the employee the company is able to realize an increase in the productivity. It is therefore important for the management to ensure that they lay out clear policies on the reward system. This can help to promote fairness in the companies and ensure that the employees are comfortable with operation and the implementation of the reward system in the organization (Wilson, Brown & Cregan, 2008). In order to increase on the productivity the manager may use the financial rewards to reward the employee who works hard in the organization. This can help to promote a hard working culture in the organization.
- Financial advantage
- Another major function of the financial rewards is fact that it helps in increasing the overall income of the employee. The extra income earned by the employee from the financial reward can help them to meet their bill and even start their own projects. Various studies have shown that the most of the people usually spend more money than they make. This therefore implies that the bonus given to the employee can help to supplement their income. The addition the financial incentives can help to reduce the employee overreliance on the basic pay.
- Supporting organization change
- The financial rewards can also be used to support the implementation of the change in an organization. This is because the management of the organization may use the reward strategies to convince the employee to accept change in an organization (Josephine, & Lisa, 2005). This therefore implies that financial reward strategies can allow the management to plan and accomplish the various goals and objectives related to the growth in the company. In relation to this these types of reward strategies can allow the management to reduce the power of the various trade unions. This is because the management may decide to devolve the pay determination to the local managers; this can in turn help to erode the power of various trade unions.
- Development of a high performance culture
- The financial reward system help to provide a mechanism that recognize achievement competency and merit in an organization. This is because it helps to provide a platform where the people who work hard in organization are recognized and rewarded. The use of the financial reward system may help to create a high performance culture in an organization. This may therefore allow the human resource manager to implement this type of culture in an organization (Teo, Clerc, & Galang, 2011). This is because the financial reward system helps to motivate the employee to work hard in order to achieve the reward. Such performance cultures are well manifested in the organization with a high performance work system. In addition this mainly happens in the companies, which have developed a clear performance expectation that is understood by the entire workforce.
- Encourages the risk taking and innovation
- Various organizations also use the financial rewards to encourage their employee to take risks and engage in the innovative activities. The managers of various companies usually set a various rewards to their employee who achieves certain set targets. This can in turn help to create the culture of innovativeness in the organization.
- Negative impact of financial rewards
- The use of the financial rewards may also have some negative in an organization these include:
- Slows down team work
- The use financial rewards slow down the team work spirit. This is because in most the financial rewards are based on the individual performance of the employee. This therefore implies that the financial incentives may inhibit the teamwork in an organization. An example is the case where many companies usually give out bonus to their employee at the end of the year. These types of incentive give the workers incentives to hold the work rather than collaborating with their colleagues (Curtis, Upchurch, & Severt, 2009). Another major disadvantage of the financial rewards is the fact that they hinder effective retention. This is because use of the financial reward creates a concept in the employee minds that ‘I work for you because you pay for’. This notion may make the employee to leave the company for a better pay however on the other hand the non-financial rewards helps in enhancing an effective relationship in an organization and therefore may help to promote retention of the employee in an organization.
- Inconsistency
- Another major drawback of various organizations using the financial reward is lack of inconsistency. This situation mainly happens due to the fact that some of the business do not constantly make profit and therefore may be forced to use other methods of rewarding their employee in the situations where the business does not make profit. In addition, the companies that perform poorly in the industry in a certain year may be forced to lower the financial incentives that the management had promised the employees.
- Overworking
- In most case the financial rewards normally rewards the individual employee effort, this can in turn lead to burn out. This is due to the fact that in most case the bonus rewards the employee for the extra hours that they have worked in the organization (Katzenbach, 2006). This may therefore lead to overworking on the part of the employee since they may end up working for long hours, nights and even weekend. Overworking may among other thing pose serious health threat on the employee due to lack of enough time to rest.
- Perception of fairness
- The reward system based on the profit sharing may have negative influence on the workers satisfaction. Most of the workers complain that the profit of the company also depend on the external factor and hence should be shared equally among the employee (Richardson, 2010). This therefore implies that the use of the financial reward system may lead to the employee assuming that there is no perception of fairness. It is also evident that the financial rewards also do not encourage strategic behaviors in an organization. However the non-financial rewards such as the gifts and promotion serve to encourage strategic behaviors in an organization. In relation, to this the use of the non-financial recognition helps in creating a sense of unity in the organization. This is because through recognizing the outstanding employee in an organization can help to create an organizational culture where the entire work forces are committed towards ensuring that organization achieves its objective.
- Lack of good employer branding
- The use of the financial reward fails to promote good employer branding in an organization. Various studies have indicated that the thinking behind the employer branding is that if an organization has an external brand to attract and retain the customers should also have the same branding internally. In this case the non-financial rewards help to link this concept better than the financial rewards (Rosethorn, & Bernard Hodes Group, 2009). Linking of the internal and external employer branding helps promote positive organizational advantage. This implies that an organization using only the financial rewards may fail to enjoy such benefit.
- Conclusion
- From the above it is evident that the use of the financial rewards has both advantages and disadvantages when used in an organization. First, the financial reward helps in motivating the employee to continue working for the organization. This motivation plays a role in ensuring that there is effective utilization of various resources available in an organization. The financial rewards can also help the management of an organization to implement an organizational change. This is because these types of rewards can be used to entice the employee to accept the change in an organization. Moreover, the financial rewards can help to improve the self-esteem of the employee in an organization. Most importantly the financial rewards helps in increasing the employee overall income. This in turn help to ensure that the employee have an additional income which they can use to increase on their daily income. However, the use of the financial rewards may also have disadvantage since they may slow down the teamwork among the employee. This is because in most cases the financial rewards normally benefit the individual effort rather than the group effort. However from the above it is evident that financial rewards have more advantage than disadvantages and therefore should be encouraged in various organizations.
- References
- Curtis, C. R., Upchurch, R. S., & Severt, D. E. (2009). Employee Motivation and Organizational Commitment: A Comparison of Tipped and Nontipped Restaurant Employees. International Journal Of Hospitality & Tourism Administration, 10(3), 253-269
- Gilbert, G. L., & Walker, D. T. (2001). Motivation of Australian white-collar construction employees: a gender issue?. Engineering Construction & Architectural Management (Blackwell Publishing Limited), 8(1), 59-66
- Holland, P., Pyman, A., Cooper, B. K., & Teicher, J. (2011). Employee voice and job satisfaction in Australia: The centrality of direct voice. Human Resource Management, 50(1), 95-11
- Hung-Wen, L., & Ching-Hsiang, L. (2009). The Relationship among Achievement Motivation, Psychological Contract and Work Attitudes. Social Behavior & Personality: An International Journal, 37(3), 321-328.
- Josephine, P. M., & Lisa, H. R. (2005). Rewards and sacrifices in élite and non-élite organizations: Participation in valued activities and job satisfaction in two symphony orchestras. International Journal of Manpower, 26(1), 93-109.
- Katzenbach, J. R. (2006). Motivation beyond money: Learning from peak performers. Leader To Leader, 2006(41), 59-62
- Richardson, S. (2010). Tourism and Hospitality Students' Perceptions of a Career in the Industry: A Comparison of Domestic (Australian) Students and International Students Studying in Australia. Journal Of Hospitality & Tourism Management, 17(1), 1-1
- Morden, T. (2007). Principles of strategic management. Aldershot: Ashgate.
- Teo, S. T., Le Clerc, M., & Galang, M. (2011). Human capital enhancing HRM systems and frontline employees in Australian manufacturing SMEs. International Journal Of Human Resource Management, 22(12), 2522-2538
- Wilson, K., Brown, M., & Cregan, C. (2008). Job quality and flexible practices: An investigation of employee perceptions. International Journal Of Human Resource Management, 19(3), 473-486
- Rosethorn, H., & Bernard Hodes Group. (2009). The employer brand: Keeping faith with the deal. Farnham,England: Gower.
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